Posts Tagged ‘Employee Confidence’

[tweetmeme source=”jeffreysaltzman”] “You are going to have to help me with this people thing.” That was what the ex-McKinsey consultant turned CEO of a major Fortune company told me years ago. He was the nicest guy. He explained to me how he could handle all of the financials to run his company but this whole people thing, what motivated them, what concerned them, he just couldn’t get his arms around that. He was baffled. What to him seemed like simple business decisions, trim here, reorganize there, in order to fine tune his company’s financial performance resulted in all sorts of emotional morale issues. “Why didn’t people see the obvious?” He thought that there should be no emotions involved in financial business decisions, that if he did what was best for the company, to ensure its survival, that people should not mind (or at least not get emotional about) being moved around like pieces on a chess board, even if it meant losing their jobs. While this company had solid financial performance, it also had a fairly high degree of turnover, with some employees after a pretty short period of time feeling burned out and not being able to continue with the firm. Yet this company also had a high degree of employee commitment and employee loyalty. How was that possible?

I participated in a graduation recently. A group of MBA student’s to whom I taught a leadership class were graduating with their degrees in hand. It was extremely emotional in a positive way for the students, their families and friends that were present. The students were smiling from ear to ear and the parents were beaming. As each student came across the stage, amid the flashing of cameras, I rose shook their hands and congratulated them on their achievement. As each student passed me, I wondered “what direction will their lives now take?”

Sense of Direction. Having a clear sense of direction, a sense of mission regarding what the organization (an organization can be anything from a poker club to a nation state) is going to accomplish, and how people can personally and meaningfully contribute to that goal will affect one’s overall sense of well-being and happiness. It helps to increase a sense of purposefulness which in turn can greatly impact people’s sense of commitment and loyalty to the organization. Most people struggle with this, looking for a sense of direction and purposefulness for at least a portion of their lives, others struggle with this for most of their lives. For the newly-minted MBA’s, they are at an inflection point, where they will be examining the decisions they have made so far and will be reflecting on a host of choices they now have which will affect their own sense of direction and sense of purpose.

For an organization, clarity on this subject allows members to self-select, for if I don’t agree with the goals of the organization (stated or otherwise), or what the organization perceives as my role in helping it to achieve those goals, it is pretty clear, that if I can, I should leave. Over time, with a clear sense of direction (stated or otherwise), what an organization can achieve is a fairly tightly knit core of people who are extremely dedicated, ferociously loyal to helping the organization achieve its goals. And yes, there is a risk that too tightly knit of a group will put goal achievement and gain for this core above all else including societal or customer well-being, potentially bending or breaking various articulated operating standards, societal rules, regulations or laws. An inner core can arise, and as C.S. Lewis pointed out a long time ago, people will do almost anything to become part of the inner circle. As with everything there needs to be a sense of balance, swinging too far in any direction is generally not good for people, the organization or society at large.

Knowing where an organization is going, what it stands for and the values it will employ while getting there can be critical to actually getting there. Each person having a sense of direction and knowing how they can contribute to that direction is a fundamental building block for organizational performance and morale.

One aspect of sense of direction having a positive impact is movement, or the direction of the sense of direction. People tend to get frustrated with stagnation and get unhappy pretty quickly about what is perceived as a backward slide, even if that slide is relatively small and from a very high place or performance level. People notice and feel positive or negatively about the direction things are headed, oftentimes more than the absolute level of the measure suggests that they should.

For instance, as we have measured Employee Confidence over the years, what we see are increases and decreases in Employee Confidence on a national level that are related to the direction of a nation’s economy and not the absolute level of economic performance. Employee Confidence goes up if conditions (e.g. unemployment levels, GDP growth) are seen as improving and it declines if conditions are perceived as dropping, regardless of the absolute levels of those conditions. Employee Confidence can be very high in rapidly developing economies as people feel that conditions are improving and that their economy is on the rise, even if the absolute economic standards are pretty low. Likewise, Employee Confidence can be low in highly develop economies with high standards of living if economic performance is seen as in decline.

As humans, we tend to perceive events and make judgments on a relative basis and not on an absolute basis. What tends to becomes normal is relative to what we routinely experience. But every once in a while we are able change the standard dramatically when a critical mass of organizational members compares what they are experiencing to other extra-organizational standards.

Let me illustrate relative decision-making in a simple fashion. Say you needed a pair of shoes and had your eye on a pair that normally costs $300. You are prepared to spend $300 on those shoes. You open the Sunday paper and see that a store 40 minutes away across town has those same exact shoes that you have been thinking of purchasing for half-off or $150. Would you be motivated to drive across town to buy your shoes at half-price? Many people are inclined to do that. Now say you needed to purchase a new car. You are looking at a car that costs $27,900 at a new car dealer near your house. You are prepared to spend $27,900 on that new car by financing it with the bank and paying it off over 5 years. You open the Sunday paper and see that same exact car for $27,750 at a new car dealer 40 minutes away on the other side of town. Would you drive across town to buy that car? Many would say no. Yet in these two examples in each case the buyer would save $150 on the purchase price. You could use that $150 to purchase the same exact things, regardless of where the savings came from, 2-tickets to a Broadway show (partially obstructed view), or a hot dog at Yankee Stadium. Yet there is a tendency for people to be more willing to save $150 when it represents a larger portion of the purchase price, rather than when it represents a smaller percentage. We make relative and not absolute judgments on how worthwhile the savings are.

The same holds true at the organizational level. If organizational performance is seen as improving relative to where it currently is, employees tend to be more upbeat regardless of the absolute starting level of that performance and if it is perceived as in decline, employee spirits will also be in decline (even if you are still the best in your industry). So how could the CEO I mentioned lead a company that achieved high levels of employee commitment and loyalty, even as people were burning out? The answer is that it was an exciting place to be, they were cutting edge, an industry leader with rapidly rising levels of performance, beating the competition and with a clearly articulated vision of where the company was going.

“Do something. If it works, do more of it. If it doesn’t, do something else.”

Franklin D. Roosevelt

During this recession employee confidence seemed to hit a low point in the first quarter of 2009. Since then there have been ups and downs but the overall trend has been moving slightly more positively with one notable exception. And that one exception is how people feel about the alternative options being available to them should they want to or be forced to leave their current employer. This sentiment on the part of employees emphasizes the notion that whatever recovery we have experienced so far has been jobless.

The employee confidence model, upon which this research is based1, has been linked to various performance metrics at personal, organizational, and country levels, and consists of two main dimensions:

Personal Confidence

Organizational Confidence

Each of those dimensions has an internal and external component forming a 2×2 matrix. Internal Personal Confidence within the context of the work environment is when you feel you have a meaningful future at your current employer including concepts such as job security. While Internal Personal Confidence has taken a beating during this recession, External Personal Confidence suffered even more. External Personal Confidence within the context of the work environment is confidence in your ability to succeed outside of your current employer, being able to land on your feet elsewhere, to be employable and if internal personal confidence is about job security, external personal confidence is about career security.

In general people’s external confidence levels can decline when they feel trapped due to a lack of options. By taking steps to continuously enhance external personal confidence they can mitigate confidence eroding situations.

What might those be?

Be aware that everyone has options. NO ONE is trapped in hopeless situations. There are paths forward. Sometimes they can be difficult to see – especially when your confidence has been shattered. Look for them they are there.

Actively work towards maximizing your options.

Have wide social networks that you interact with regularly (relatives, friends, co-workers, people at church, etc.). Make use of your network when your confidence suffers a blow. Everyone can relate to that.

Develop a smaller network of trusted confidants that you can talk to openly about your issues.

Realize that regardless of what caused your confidence levels to decline, you are not the first person to go through what you are going through and many others have successfully overcome similar obstacles. You can too.

Continuously improve your skills and knowledge, no matter what you do for a living or your education level look for personal growth, skill and mind development opportunities and take advantage of them.

Develop additional coping mechanisms such as an exercise routine, a hobby, volunteering that can get your mind off your immediate confidence issue. The idea is to build a buffer, to create some space that is more normal, more routine and gives you time to get your emotions under control.

Remember that sometimes blows to your confidence may have nothing to do with you. In the case of office bullying for instance, the person doing the bullying whether it be a boss or co-worker is often insecure or has other issues and exhibiting a lack of confidence in themselves. Unfortunately their way of coping with their own insecurities is by taking it out on others. In this case the issue lies with others.

Don’t sit back and do nothing. That simply makes things worse.

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1.Saltzman & Brooks, Strategic Surveying in the Global Marketplace and the Role of Vitality Measures, 2010 appearing in Going Global, Jossey Bass.

Some of the research I have done over the last few years treats countries as nothing more than large organizations, with each country’s respective head of state filling the role of CEO. This approach has enabled me to apply the research techniques developed over the last few decades, such as linkage, on measuring organizational performance to entire countries. Not surprisingly, the results we would expect to find at an organizational level, say a public or private entity within a country, also applies when you sample a representative cross-section of citizenry and look at country-level performance indicators such as GDP growth or corporate bankruptcy rates. I developed an index a good number of years ago called Employee Confidence, and since June 2008 was measuring it quarterly on 16,000 people in the 12 largest global economies.

Within just the USA for one study, I treated each state as the organizational unit and made comparisons of citizenry attitudes to unemployment levels, and by looking at the change in attitudes over time, was able to get some indication of whether the citizenry attitudes were a leading indicator of what unemployment levels would be or a lagging indicator. The largest correlations between citizenry attitudes and unemployment came when linking together attitudes at time 1, with the following month’s unemployment level. In other words, the strongest relationships found were between attitudes now and what officially reported unemployment levels would be 1 month from now. This relationship was marginally stronger than the relationship between current attitudes compared to the previous month’s unemployment levels (postdictive – unemployment levels, the month preceding the measurement of the attitudes), current attitudes compared to current unemployment levels (concurrent points in time), and current attitudes compared to unemployment 2 months out. This would seem to give some indication that asking a cross section of citizenry about their levels of Employee Confidence might be a leading indicator of whether unemployment levels and potentially other economic metrics were heading upwards or downwards in the near term, and this leading indicator can be available before officially reported economic figures.

I recently co-authored with Scott Brooks, a book chapter, appearing in Going Global, for the Professional Practice Series, for the Society of Industrial and Organizational Psychology which documented some of the major findings from this body of research.

Now, given that the evidence suggests that certain citizenry attitudes at a country level can be used in a similar fashion to employee attitudes in predicting organizational performance we can begin to draw some conclusions not only about “people at work” which has been done countless times, but about “people as working or unemployed citizens”.

For instance, a good number of years ago I looked at the combination of workload and employee satisfaction or morale in the workplace. Here is an excerpt published in Executive Viewpoints on that work. “Employees who consider their workload to be “about right” tend to be the most satisfied with their jobs, while those who say they are underworked are even less happy than employees who complain of being overworked”.

“The study looked at the job satisfaction levels of more than 800,000 employees at 61 companies worldwide. Of the companies surveyed, 75% have operations in North America, 11% have operations in Europe, and 14% have operations in Asia. Employees participating in the survey were asked to rate their overall satisfaction with their jobs, as it relates to their workload, on a 100-point scale. Respondents who described their workload as “about right” rated their job satisfaction at an average of 73, while employees who said they had “too much work” rated their satisfaction level at 57. Those with “much too much work” had an average satisfaction rating of 42. By contrast, those who said they have “too little work” rated their job satisfaction at 49, and those who complained of having “much too little work” had the lowest average job satisfaction rating, of 32. The survey also identified variations in the way workers in different parts of the world felt about their workloads.

“Results showed that employees in Europe and Asia were about three times less likely as North American workers to say they were satisfied with having “much too little work.” Employees in North America who said they had “much too little work” had an average satisfaction rating of 36, whereas European workers in this category had a satisfaction rating of 12, and Asian employees a rating of 13. The study also showed that employees in Europe and Asia who claimed they have “much too much work” were somewhat less satisfied with their jobs than their counterparts in North America. While North American employees who said their workload was much too heavy had an average job satisfaction rating of 44, European and Asian employees with “much too much work” rated their job satisfaction at 34 and 25, respectively.”

Some conclusions that can be drawn looking across these studies include:

There is some generalizability possible between employee attitudes at work, and given a large enough and a representative sample, citizenry attitudes at a country level.

People tend to be more positive when working productively and on a whole would rather be working harder than not having enough to do. When they do not have enough to do, either at their employer or when unemployed, there is a tendency to feel that their contribution is not valued either by their employer or society.

The notion that creating societies with strong social safety nets, such as unemployment insurance, as has been done in some European countries to an even greater extent than in the USA, diminishes the desire to work does not bear out.

There is a tendency for humans to make decisions and draw conclusions representing their world-view based on heuristics, or rules of thumb. The down side of this evolutionary derived shortcut to speedier human information processing is that it can play into stereotypes and even bias and bigotry if one is not careful.

And there is a tendency on the part of organizations to also simplify their need to process information, which requires an expenditure of energy (i.e. resources) by creating rules which are broadly applied to those who reside within the organization. Unfortunately, these rules are often derived to control the outliers in the organizational distribution, the worst case scenario, rather than the vast majority who are in the “fat” part of the distribution.

Lets apply some evidence-based decision making to the notion that by extending unemployment insurance, we as a society, are creating benefits that are so generous that those who are unemployed will have less of a desire to work.

The evidence suggests that the vast majority of people are happiest when working, and in fact are happier when over-worked rather than underworked.

The evidence suggests that in societies with strong social safety-nets that there is no diminution of the happiness and satisfaction for the majority of workers that working and working hard brings.

It is possible to go into the general population and at the extremes of the behavioral distribution find individuals who fit the worst-case scenarios of people who do not want to work and would rather collect money from the in-place social safety nets, but they are nowhere near what the majority of us want and what makes most people feel good about themselves. Based on a review of multiple databases that include both the private and public sector, the evidence is clear, most people want to do a good job at work, want to feel that they are contributing in a meaningful fashion, would rather be overworked rather than underworked and their frustration levels and eventual withdrawal from the organization can be driven by their inability to do so.

How do employees react during a recessionary period? What happens to their attitudes about work and the work environment? What about their perceptions towards leadership? And most importantly do those attitudes, or shifts in attitudes actually affect organizational performance? The information that has been distributed on this topic over the last couple of years has been somewhat less than clear, or at the very least has been sending mixed interpretive messages. Some of the reported data has indicated that employees on a whole are less positive, less engaged or as some term it actively disengaged. That finding could represent a possible reaction to the somewhat harsh measures that some leaders adopted as they attempted to increase the odds of organizational survival during a deep recession.

Other reported findings strongly affirmed that employees are more positive now than prior to this recessionary period, possibly as a result of realizing how ugly things are on the outside, so the inside is looking pretty good. That would be a result underpinned by both frame of reference comparisons and the notions of cognitive dissonance, the need to resolve conflictual cognitive positions (e.g. even though I used to really hate it here, the place must not be so bad since I am staying). Categorical statements, that something is all one way or the other, black or white, raise my warning antennas and so one is left wondering, is it possible to look across the various reported results, many of them stated in a categorical fashion, and make some sense of it all? Scott Brooks, Walter Reichman and I did just that and here is a summary of some of what we found.

Methodological observations regarding the reviewed reports:

Some of the reports we reviewed1 are based on client data, meaning data that has been collected from clients during the course of a consulting firm running their employee surveys. Client data over the course of a few years can change, depending on which clients the consulting firm happens to have, what survey cycles clients are on etc. One industry for instance that may be well-represented in the norms during normal economic times like retail, and has been hard hit by the recession may cut costs by delaying or canceling their survey, and so their industry may be underrepresented in the data during a recessionary period if the norms are client based. So when examining client data over time you may not be looking at an apples-to-apples comparison even if the data is coming from a single source such as a consulting company.

Additionally, surveys of clients that occur during recessions may represent clients that are weathering the recessionary storm slightly better than most, since the budget for collecting the data has not been axed, or the data may be coming from organizations that are deep adherents (at least more so than others) to the notions of collecting and measuring certain aspects of employee attitudes, employee engagement being one of those. And of course the employees themselves who are being surveyed in client based norms are the survivors, those who have not been laid-off, which may also have an impact on their attitudes, especially when compared to the general population. One approach to correcting some of the issues with client-based research is the use of a standard basket of companies for tracking purposes, similar to the Dow Jones Industrial Average methodology. That could be achieved through a consortium of companies who agree to share their results. That would fix the problem of which companies are included (since it would be standardized) but not who from each company is included (during a recession we would still be surveying only survivors).

Some of the reports that have attempted to shed light on the state of employee attitudes during this recession are based on random sample surveys or stratified random samples (meaning you make sure certain demographic categories, such as senior managers, or females etc. are adequately represented). These data are not client based, but rather are gathered from people who have agreed to complete surveys, usually for some kind of incentive, for instance, a chance to be entered into a lottery for each survey they complete. These surveys include a cross section of people, some employed, some under or unemployed but if sampled correctly are representative of the population as a whole, not necessarily the employed population, or the population from companies that care enough about employee attitudes to be out there measuring it. Depending on how the sample is drawn they may come from private and public sector organizations, government as well as not-for profit. It may include those working full-time as well as part-time. One issue of course here is the motivation that these individuals have for completing the survey. Many of them, we have to assume, are not doing it for the sake of the research, but rather in a fashion to maximize their ability to achieve whatever incentive is being offered. (That is why it is called an incentive.) That creates a question in many minds of just how these people will respond, and will they take the survey seriously.

One conclusion from looking at all of the data that gets put out is that unless it is clearly stated in the report, and often times it is not, and the methodology explicit, you really don’t know who is included in either client-based or in random sample survey reports and hence the conclusions from one report are not all that easily compared against another.

Some broad trends we saw:

“Engagement” during this recession has not declined. With an eyeball meta-analysis, the actual change may be slight improvement, perhaps 2-4 percentage points over the last year. This “surfs across” potentially meaningful differences in sampling, methodology and varied definitions of how you measure engagement. But those institutions that describe engagement as declining are in the minority.

Not all employee opinions act the same way, moving up or down in lockstep.

Stress is increasing.

Opinions about leaders have fluctuated.

US Employee Confidence hit a low 1Q09 and has not returned to the 2Q08 baseline.

One conclusion is that “engagement” may not be the best indicator of the strain of the recession on the employee population and hence organizational performance.

There is no “overall” recession impact across all survey topics

There is evidence of polarization within some organizations. While different across different studies, there seem to be segments (levels, functions, etc.) within the organization showing divergent trends:

Perhaps while engagement goes up, there is a growing core of actively disengaged employees.

Executives and middle management respond differently, though exactly which layer feels the squeeze most keenly is not clear from the reports (and they likely differ organization-by-organization… as is clear in some cases among our own clients).

Increasing frustrations (driven by increasing workload and lowered rewards/benefits) among high performers/high-potentials put them more at-risk for eventual voluntary turnover.

In 2008/2009 you generally did not see declining employee engagement scores at organizations (there was the occasional exception). The scores were flat at worst but most were actually rising with many hitting heights not seen within the organization prior. This was in spite of the general concern among clients that engagement would decline during the recession. Some of this can be attributed to good management taking action on important issues and some is environmental, a response to the concern that people have about losing their jobs. One notable study had a client with 7 point rise in their employee engagement score across about 25,000 people. A determination was made that 2-3 points of that rise was likely due to management actions and 4-5 points was due to the environment. (Drop me a note if you want to know how that was done jeffreysaltzman@orgvitality.com).

About Employee Satisfaction:

In many cases however, items that were markers of the employee’s current state of satisfaction with their situation declined. By way of explanation, a person can be very unhappy with increased workload and stress, with their 401k losing substantial value, with no company match, no raises, friends being laid off, increased concern about their own job security, perhaps seeing management taking care of themselves before the rank and file, but that person can still be engaged in their work. As an example, a person can be very engaged at their employer making buggy whips as Henry Ford is in the next building figuring out how to mass produce cars. They are engaged, working diligently to produce the best buggy whips in the world, but their level of engagement does not stop the world from changing nor does it assuage increased concern at seeing the world changing with perhaps the employer not changing or not changing fast enough to keep up. A corollary to this is the false notion that employees who complain are not engaged. They in fact may be the most engaged as they are trying to communicate to the organization information to head off a potential disaster as they see it.

While some people/organizations measure satisfaction and engagement with the same items, they are clearly different constructs. (Of course there is no agreed upon set of items in use to measure engagement within the employee survey industry which may account for some of the reported differences).

About Job Prospects and Job Security:

Being able to find other employment if necessary, which is normally very favorably rated, began to decline and has remained at or near the bottom of all the items tracked. Most normal people by nature tend to rate their skill sets highly and see value (beyond what others may see) in what they can do. This makes them normally very confident in their ability to find another job should the need arise. The precipitous decline in this dimension is a fundamental shift in people’s confidence (it has rocked their world and how they self-perceive) and affects all sorts of behavior including buying patterns and a willingness to tolerate intolerable conditions at an employer. As this score recovers we will see people who had been staying with an employer because of a lack of opportunity elsewhere move on with a corresponding increase in voluntary turnover. This may be starting already as for the last 3 months voluntary quits has surpassed layoffs as why people leave jobs and for the 15 months prior to that layoffs surpassed quits.4 This finding is perhaps giving an inkling of what is to come.

Perceptions of job security at the beginning of the recession when all the layoffs started were understandably in steep decline. This lasted through the first quarter of 2009 and roughly corresponded to when a massive bulge of layoffs occurred with 3979 mass layoff events occurring in 1Q09, a record high affecting 705,000 people5. This also corresponded to the lowest Employee Confidence scores recorded. However, once that bottom was hit there was a rather sharp rebound later in the year. One possible interpretation is that employees felt that the organizations had cut to the bone and could not cut any more. Employees felt that they had survived so far and so where likely to weather the storm. Exceptions to this pattern of decline and then rebound occurred in industries that were weathering the recessionary storm rather well including healthcare, education, government and food service. They did not see nearly as much of a decline. Females were more positive about job security than males, not because they were females, but because of an over-representation in industries that were doing ok. The gap between males and females disappeared when the rebound occurred, possibly due to the males feeling that all the cutting that was to be done had been carried out.

About Business Process:

During this recession it was pretty clear in the data that the majority of employers were trying to cut their way to profitability, rather than innovating with new attractive offerings or by moving into new markets. They were revamping internal processes, laying off people, cutting budgets and benefits. They were looking inward rather than outward to find solutions to their performance problems. And while it is always healthy to improve internal organizational performance, in this case it is a rather risk adverse approach compared to modifying the products and/or services being offered. It is more of a sure thing to cut back on costs rather than create products that people find attractive, even in a recession, as a way to protect margins in the short term. Not every company took that path however and historically companies that have been started in recessionary periods included: HP, GE, Burger King, Fedex, Microsoft, CNN, Trader Joes, and our own OrgVitality. Each one creating a path to success based on offering attractive and valued products and services to the marketplace that were relevant to the economic time period in which they found themselves. In this recession Autodesk, Nucor, Colgate Palmolive, Apple, Coca Cola, Target, McDonalds, Dunkin Donuts, and Google among others for instance have done quite well by developing new and innovative products and by moving into new markets.2

About Organizational Effectiveness and Leadership:

At the beginning of the recession, the back-half of 2008, management was given the benefit of the doubt and was given stable or slightly increasing scores from the rank and file regarding their job performance. Of course you need to keep in mind that the rank and file during this period are the survivors, those who had not yet lost their jobs. As it appeared that the recession was going to get really ugly in the first quarter of 2009, the rank and file lost a lot of confidence in management and performance ratings on management plummeted. The realization hit that there was no magic bullet that the recession was going to be painful and deep and of a long duration and the blame, at least partially, was laid at management’s feet.

Ratings of leadership over the last year and a half or so have been very volatile with some organizations reporting extremely favorable ratings on leadership while at the same time others are reporting the poorest scores of recent memory. There has also been more divergent trends within organizations, often with vital groups perhaps feeling more stress than others (e.g., VP levels) declining dramatically while other levels are able to maintain or improve. A sharp recovery was noted in the perceptions of the job being done by management, as rated by employees, during the back half of 2009 as many of the programs designed to temper the recession began to have an effect among those still employed and further draconian layoffs were not as prevalent.

About Geographic differences in the USA:

If you compared the attitudes of employees against the unemployment level at the state level a significant relationship was found. In other words, in general those states that were exhibiting higher levels of unemployment were generally those where employees had the lowest levels of confidence. Some interesting patterns and exceptions to that statement emerged.

Those employees in southern states tended to be more positive than their unemployment level suggested they should be. In general, those in the mid-west were less positive than they should have been with the notable exceptions of Nebraska, the most positive single state and the state with the lowest level of unemployment, and Michigan with the highest level of unemployment and the second lowest level of employee confidence. Those states located in the northeast and west had employee attitudes as predicted by their unemployment levels with the exception of Oregon where employee attitudes were less positive than they should have been. The states that were exceptions certainly had the attitudes going in the predicted direction given their unemployment levels, it is just that the corresponding employee attitudes were more exaggerated than expected in either the positive or negative direction.6

Interpretation:

The recession has put organizations and employees on edge. While dealing with the increased stress and load created by aggressive cost-cutting, employees have a heightened sensitivity to leadership messages and missteps and organizational cues regarding the future. Critically, employees watch how the crisis has revealed the organization’s commitment (or not) to its stated values.

As a result of this sensitivity, organizations may experience greater swings in engagement and/or satisfaction through the recession (the two not necessarily being related or moving in the same direction), though the swings may go in either direction and may be concentrated within a specific population. These swings may occur within key segments (e.g., management layers, functional areas or performance levels).

But changes in survey results seen across clients lead to a conclusion: the recession isn’t the only cause of changes in employee opinions and engagement in particular; it’s the organization’s response to the recession.

In many cases, employees have rallied behind their organizations’ recovery efforts, and are as engaged or more engaged than ever. In part, they are not simply comparing the “now” to what was. Clearly they understand that the crisis has demanded dramatic change, and they have hunkered down to help. To some extent they may compare themselves to other cases of what might be, for example to the failings of other organizations or to their unemployed acquaintances.

One way to sum it up is that the recession has become a test of Vitality including strategy, values, behaviors, organizational agility and resiliency. Organizations are not passive players regarding the degree to which decision-making authority is sucked upwards, open communication is stifled, leadership commitment to values are maintained, or the emphasis on service remains central. Certainly, it has become harder to invest in employees. But in many cases, employees understand that and may take even greater pride in how their organizations handle the recession.

1Sources of published findings which were reviewed included: OrgVitality, McKinsey, CLC, Metrus, Valtera, Modern Survey, Kenexa and Towers Perrin among others.

2The Business Week 50, Business Week, March 26, 2009

3The Employee Confidence Framework was developed by Jeffrey M. Saltzman.

What if one company out there thumbed their nose at the generally accepted practice of laying off staff that are deemed as unnecessary during this recession/mini-depression and kept as many of their workers employed as they possibly could? Heresy? Financially irresponsible to shareholders? An act of defiance against standard business practice? SunGard Data System of Wayne Pennsylvania is doing just that, betting that as the recession winds down that they will be in a better position to capture market share, rolling out new and improved products that they have worked upon during this slower time (WSJ, December 24, 2009). There is plenty of research data to suggest that they are making a pretty good bet, research that could be summarized with a single statement, “You can’t cut your way to prosperity”. I applaud Cristóbal Conde, the CEO of SunGard. He is doing the right thing because he believes that it makes good business sense to do so. SunGard though is privately held and so may feel more latitude to take a longer-term view than public companies.

There are times when the status quo is just not acceptable. This is one of those times. We need to do extraordinary things right now in order to get people back to work. There are huge numbers of good people out there today who are suffering. Suffering economically, physically and mentally, and yet certain elements of our society who can impact this and make a difference seem to be turning a blind eye to the situation. You want the federal government to stay out of meddling in the private sector? One sure way to do that is to start creating a significant number of jobs. So what if the profits are a bit lower this quarter or this year? So what? One response may be that investors will pull their money, investing it in companies with a colder-heart, able to cut staff to the bone to shore up their bottom-line. Or that executives who refuse to operate in a cost-cutting fashion will be let go. If one company defies the standard wisdom and then another and another, keeping as many of their people employed as they possibly can, this act of defiance may be the one thing that can right the economic ship we are all on, for if the ship is not righted we will all sink together.

If people do not have jobs, there is no one able to buy your products or services; it is as simple as that. Are we all so short-sighted, chasing that immediate bottom-line number that we forget that we are all enmeshed in a larger society, a larger organization if you will, that must function, succeed, in fact thrive, if we are all to prosper. If our society does not thrive as a whole, what happens to any one sub-organization, any company, within that society is more-or-less a foregone conclusion. You want people to buy cars? Let’s create jobs. You want people to buy houses and all the items they need to furnish them? Let’s create jobs. You want people to frequent restaurants more? Let’s create jobs. The list obviously is more or less endless.

How I felt about this was brought home to me a few weeks ago by a friend I met for an afternoon cup of coffee. He had been laid off from his corporate job in Manhattan and I had quit my job a few months back to work on a startup. He asked me what I would most enjoy about the startup. I thought about all the different things that I have done so far during my career and what I really found to be most rewarding was creating jobs. I have worked on mergers and acquisitions, I have done CEO-level coaching, I have helped organizations with change efforts including radical culture change, I have developed selection procedures, created succession planning systems and I have grown a company approximately 3-fold, adding international operations. Yet the one thing that I have found most rewarding is when I have been able to hire another person to the team, welcoming them and their families into the organizational family. That, I told him is what gave me the most pleasure.

Company after company keeps talking about how critical employees are to the success of their organizations, their most valuable assets, yet company after company lays off these most valuable assets without any real attempt to make as many jobs as secure as possible. The public image is of organizations whose sole concern is the ongoing well-being of the organizational entity, having little concern about the individual’s who were let go. That is the government’s problem after all, right? I know I am being somewhat harsh and there are many managers out there who agonize over what they have done. I suggest we all act a little defiantly.

There are numerous acts of defiance within various societies that have become burned into the social fabric of consciousness some of these include; A lone person standing in the path of a tank on Tiananmen Square, the marchers behind Martin Luther King being hit by water cannon and attacked by dogs, school girls being escorted into a newly desegregated high school in Little Rock by National Guardsmen, the people of Berlin tearing and dismantling the wall that had kept that city separated and firefighters raising the American flag on the ruins of the World Trade Center. The images leave one breathless.

Less known is the image of Tuvia Belski and his brothers welcoming to the Belorussian forest escapees from the Nazi ghettos. Rather than accepting only the young and strong who could fight, only those they absolutely needed who would add to their ability to survive, they took in everyone, providing as best as they could for all, an act of defiance against the Nazis. Twelve hundred people, the young, the old, men, women and children survived in the forest camp that the Belski’s created.

A group of managers at a GE management development course a number of years ago came up with a definition for teamwork that we should all keep in mind these days, “Teamwork: Not allowing others to fail.” I would like to see Teamwork as an act of defiance on the parts of CEOs out there who I know care – create jobs, even if it hurts. If enough do, you could create images that will become burned into the social fabric of our society, the CEOs who pulled us out of the grips of a recession, rather than the blind-to-risk, in-it-for-themselves image that now exists.

As reported in the NY Times (December 22, 2009), for the last four months there has been an increase in the number of temporary workers, well beyond the hiring levels of permanent workers. This four month increase of hiring temporary workers over permanent workers is of longer duration than the last two recessions, which saw two month increases until increases in permanent hiring were greater than temporary ones. Are we seeing a quirk, driven by the severity of this recession/mini-depression, or have organizations decided now that for the long-term that they will operate with larger percentages of their workforce being temporary?

A quick search also turns up increasing numbers of casual workers in many countries globally, along with growing alarm that these increased numbers of inherently insecure jobs can wreck havoc with a country’s economy. Recently one HR magazine reported that a permanent shift may be underway moving the US economy from 15% casual workers to 30% or greater casual workers. If this shift occurs, it is a seismic shift in the US workforce and most organizations as well as workers are ill prepared to deal with it. While many organizations look at the financial benefits that accrue from jobs that are more easily shed, very little thought appears to be given to the costs of having a substantial component of the workforce without a long-term commitment to the organization and organizations without a long-term commitment to its employees. Loyalty died a long time ago, right?

These unexplored costs may rear their head in terms of poorer customer service, less attention to quality, little to no organizational memory on how things should get done, no commitment to seeing things through, and higher levels of turnover as people leave what is unstable employment for opportunities that may provide more stability or at least a few months of more stability. The defense industry has struggled with this for decades as people within that industry can get “hired” for a specific project and well before the project has ended, these temporary workers being to look around for their next opportunity, as they have little incentive to finish a project that upon completion leads to their termination, and only after being terminated spending time in a search of a new opportunity. The searching and exodus begins well before the end of the project.

Other organizations with the desire to look good on paper to their investors or boards when it comes to headcount will utilize temporary workers to keep the number of permanent staff below a certain threshold. They are willing to have a constant rotation of temporary workers fill positions that could be filled by a permanent worker, a permanent worker who would likely be more effective and efficient in completing work than the rotating temps who are constantly on the learning curve.

There are plenty of models out there regarding what an employer should do to motivate employees, (e.g. pay them well, have good benefits, provide them advancement opportunities, give them interesting work to do, even plenty of it), but there is a serious hole when it comes to what you can do to motivate temporary or casual workers as to maximize chances of organizational success.

While some organizations hold out the carrot of permanent employment with better wages and potential benefits should the organization’s fortune continue to rise, those promises may not always or often materialize, and these days’ workers have an awful lot to be skeptical about. “In the past, temps who do well have often been offered regular employment, with higher pay and benefits. Given the uncertainties about this recovery, companies are not doing that now, and temps, as a result, are less likely to spend as freely as regular employees or to qualify for credit, generating less demand than permanent employment would.” (NY Times, December 22, 2009). Sounds like a self-reinforcing negative cycle to me.

The traditional motivators of pay, benefits, advancement and job security are not available to many organizations or the people working within them these days, so what can an organization offer that would be motivating to these temporary or casual workers? Well if you can’t offer job security, how about offering career security?

Job security is an attribute that affects the Personal Internal Confidence quadrant of the Employee Confidence model, a concept that I developed a number of years ago and have been collecting data upon and testing out over the last few. Personal Internal Confidence is the notion that things that happen on the job, leading to perceptions of job security being high or low, advancement opportunities being there or not and overall whether a bright future is to be had at the organization, will impact an employee’s overall confidence. These factors are internal to where the person is currently employed and are the traditional drivers of employee loyalty, and are significant motivational factors.

Personal External Confidence is the notion that, were I to leave my current employer, for whatever reason, that I could land on my feet elsewhere. I am prepared to succeed with different employers within my area of expertise or in other areas, but regardless, should I depart I will be fine as I have transportable skills, others are hiring people with skills similar to mine, and the likelihood of me finding a comparable or better job elsewhere is pretty good. In other words I am not afraid of the outside world. Helping prepare people to successfully deal with the outside world and becoming known as an organization that is very good to be “from”, is one way to motivate workers and to keep them, whether they are temporary, casual or permanent.

In fact, an article appearing in the Wall Street Journal (October 26, 2009) starts off this way: “Determined to retain your most talented executives? Well, here’s some counterintuitive advice: The best way to keep them from leaving is to prepare them to do just that.” The concept of preparing people to be successful upon leaving the organization is not only motivational but also encourages them to stay. One argument that is made against this notion, and I have heard some CEOs suggest is, “why invest in people when, as soon as you make the investment, and they get trained up, they will walk across the street for a 10% raise?” So one response to that is, “so you would rather have an untrained or unskilled workforce doing your work?” But rather than a snide comment for these executives let’s look at the data.

The data that has been collected on this topic shows that those employees who recently joined the organization and feel like they are not getting training or development will leave as soon as they possibly can, they have no loyalty. So the organization will have a continual drain of talent that the organization just worked to obtain. At the other extreme the most loyal group to the organization are long-tenured employees who feel that their skills have rusted away and that they would have difficulty finding similar employment elsewhere. So those who feel most trapped, with limited opportunity elsewhere and who are likely not in possession of start-of-the-art skills are not going anywhere. Not exactly the kind of workforce to guarantee organizational success. For those folks in the middle ranges, the data shows that those who are receiving development opportunity and are keeping their skills sharp are no more likely to leave than anyone else.

So in a nutshell, if I join a company but am not getting developed, I leave. If my skills have become obsolete, I stay, and if I get past the short term and get development opportunity I am no more likely to leave than others. That combination would seem to be a good argument, promoting the notion that it doesn’t hurt to give people what they need to develop high levels of Personal External Confidence. Some organizations have already gotten this, with one well known beverage company using this notion to recruit and retain staff. They say, “We invest in you, you invest in us. We cannot guarantee you lifetime employment, but what we can say is the time you spend here will be well spent.”

Employee Confidence has many interesting implications at the company, industry, country, even global level. If you would like to learn more about Employee Confidence and its impact on organizational performance, contact me at jeffreysaltzman@orgvitality.com.

The legend of the fountain of youth or variations upon that theme occurs in many cultures going back centuries. It is said to yield magical water that can restore and maintain your youthful self. Ah….to be young again. But maybe it is not all that it is cracked up to be or maybe it is? One aspect often associated with youthfulness is a sense of optimism about the future, an inherent sense of immortality and that nothing can strand in your way. No mountain is too high, no river too wide… no wait that was Marvin Gaye and Tammi Terrel in 1966. Anyway, is there any evidence to support the notion that youthfulness brings with it a sense of optimism about the future?

In measuring Employee Confidence in the workplace, I contrasted younger (18-29 year olds) vs. older (50+ year old) workers on the levels of Employee Confidence they have in the workplace. A few observations.

The 12 largest economies were studied (USA, UK, Canada, China, India, Russia, Germany, France, Italy, Brazil, Japan, Spain), and Employee Confidence among the younger crowd was relatively stronger as of March 2009, with the exception of Japan where the youths were a few points lower on Employee Confidence than the older folks. In most countries the benefit of youthfulness is between 5 and 15 percentage points. So in general, yes, there is youthful optimism or at least higher levels of youthful Employee Confidence. There are a few other interesting patterns that emerge.

In both Spain and particularly in China in June of 2008 the older folks were expressing higher levels of Employee Confidence than the younger and by March of 2009 both of those positions are reversed with the youths now being more confident.

As of March 2009, the largest gap between the younger workers and the older ones, with the youths being more positive, is found in Russia followed by Italy and the UK.

As of March 2009, the smallest gaps between the younger and older workers was in Brazil followed by Japan.

A high level of Employee Confidence is achieved when an employee perceives their organization as being effectively managed with good business processes, competitively positioned with attractive products and believe they have a promising future with their organization, job security and if needed skills that would be attractive to other employers. Employee Confidence influences individual behavior and has implications for organizational performance and more broadly macro-economic conditions.